"Account" has
been expanded beyond payment rights arising out of the sale or lease
of goods and services to include rights to payment, whether or not
earned by performance, arising out of the transfer of rights in tangible
and intangible personal property, such as license fees, credit card
receivables, payments for incurring suretyship obligations, and government
sponsored or licensed lottery winnings. Similarly, "Chattel Paper"
has been expanded to include software licenses. The definition of
"General Intangibles" has contracted as a result of the
expansion of other collateral definitions and the creation of new
collateral definitions.
For example, rights to receive royalty payments under a trademark
license have been reclassified under Revised Article 9 as an "Account"
rather than as a "General Intangible" under old Article
9. As a practical matter, this means that certain types of collateral
which were previously covered by the term "General Intangibles"
under old Article 9 will no longer be included in the definition
of "General Intangibles." The definition of "General
Intangibles" has been revised to specifically exclude commercial
tort claims and deposit accounts, both of which will be defined
as their own separate category. As a result of these and other revisions
to collateral classifications, secured creditors will want to evaluate
their security agreements to determine if the definitional changes
contained in New Article 9 will result in the loss of any collateral
or whether additional categories of collateral should be added.
To make sure that you pick up all general intangibles without any
reduction in the meaning of "general intangibles", for
example, you may want to define General Intangibles as those defined
in former Article 9 and "including general intangibles that
are classified otherwise under Revised Article 9."
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In addition
to "Commercial Tort Claims" and "Deposit Accounts",
Revised Article 9 contains several other newly defined categories
of collateral, such as "Electronic Chattel Paper", "Letter
of Credit Rights", "Payment Intangibles" and "Software".
Referral Measure Successful
We all know by now that Senate Bill 2191 which became effective July
1, 2001, was referred and defeated in the June 11, 2002, primary election;
the law is again the pre-July 1, 2001, version. Through the referendum,
North Dakotans reestablished opt-in privacy protections for financial
information. A "No" vote on Constitutional Measure Two rejected
an opt-out standard for financial privacy that was adopted by our
state to harmonize with the standard passed Congress in 1999. Supporters
of the bill successfully used the scare tactic that the new state
law that made it easier for banks to sell their customers' checkbook
secrets. Roughly 74% of voters rejecting the new privacy law, which
the Legislature approved last year and which generally allowed financial
institutions to sell customer data to outside companies without obtaining
the customer's written permission. As a practical response, financial
institutions should reexamine their policies to make sure that they
adhere to the prohibition against sharing customer information without
the customer’s written consent or the exceptions to the written
consent requirement.
As a part of the reevaluation, institutions should review the privacy
disclosure notices that they have given to their customers to ensure
that the notices are accurate.
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